I have been watching the iPhone for a while, but just recently bought one. I'm going to keep updating this entry with my experiences with it so far and my opinions of it.
* Bluetooth A2DP support (stereo sound)
* Tethering of some sort (via Bluetooth or WiFi).
* Copy/Cut/Paste
* Bluetooth keyboard support
* A good solution for in-car use
* Voice dialing
* Support for more Bluetooth profiles in general
* Multi-media messages (MMS) support (ie picture messages)
* E-mail search options
* GPS (though the locate-me function works well)
* Ability to store arbitrary files on it
* Streaming music to Airport Express (iPhone remote in 2.0 now provides this)
* Playing music off an iTunes share
* Browser plugins so there could be things like adblock/noscript
If tethering weren't possible through a hack (using an ad-hock WiFi connection combined with a socks proxy), I would not have bought it. Tethering is a killer feature for me, although I wouldn't use it that often, just on occasion when I'm traveling. But the browser works so well it actually takes care of a lot of my computing needs when I am traveling.
* The interface! This is best use of touch screen I have ever experienced. I didn't think I'd like the touch screen keyboard, but its actually quite nice to use and effective in. The ability to "flick" your finger across the screen to scroll in the direction you want to go is very useful.
* The browser. The web browser (Safari) is very competent and works like a normal desktop browser most of the time. The ability to zoom (via double tap or pinch) and to flick around the web page makes me especially nice. I sometimes prefer using it over a browser on a computer. The mouse feels archaic after using the touch screen.
* On/off switch for the ringer. There is a physical on/off switch for the ringer. I don't even have to take the phone out of my pocket to turn the ringer on or off. This may not seem like a big deal, but when you are turning your ringer on and off all the time, it really is. Are there any other phones that have this feature and implement it this well?
* It's not too big. Compared to many of the "smart phones" on the market, its actually a decent size. I used to carry around an old Qualcomm QCP-xxxx ("slimphone") that was as thick, longer, and less than half an inch smaller in width than this phone. I don't even notice the iPhone when its in my pocket (once I get a case for it this will likely change).
* The camera. No flash and doesn't take very good pictures (in my opinion). There is no video functionality.
* Only one-button. I wish it had two more physical buttons next to the home button that could be assigned to different functions. I'd have one assigned to my phone favorites and one to the music player controls. I don't expect Apple to ever change this, though, they are very attached to their one-button philosophy. Double clicking the home button isn't good enough because while the music player is playing you may either want it to go to your favorites or to your music player controls, but you can only set it up to do one of those. Maybe they should add a triple-click option.
* Recessed headphone port requiring you to buy an adapter to use any 1/8" connector that isn't small enough. (the 3G iPhone doesn't have this problem)
* It's a pain to use in the car. The classic/nano iPods are much easier to use in the car, especially for next/previous tracks and pausing. To make matters worse there are no head units or other devices that can control the iPhone without disabling the phone's controls (which has always been the case for iPods, but this presents a problem for the iPhone since you may need to place/receive calls with it). I am planning to get one of those adapters that has a mic and button like iPhone headphones.
* You can't choose arbitrary music tracks as your ringtone. Creating a ringtone in Garageband is nice and all (if you own a Mac), and its not too hard to do without Garageband, but being able to choose any music track you have loaded onto your phone is becoming a standard feature in phones these days.